Procurement Procedures for the Selection of Administrative Consulting And

PROCUREMENT PROCEDURES FOR THE SELECTION OF ADMINISTRATIVE CONSULTING AND ENGINEERING/ARCHITECTURAL SERVICES

If anapplicant plans to use LCDBG funds to pay for contract services, the federal and state procurement requirements must be met to avoid penalties.

The first public hearing (see Citizen Participation requirements) must be held prior to initiating procurement procedures. This enables the applicant to determine the services needed for the application (i.e., engineer for a sewer project or an architect for a fire station project). Procurement procedures undertaken prior to the first public hearing held in conjunction with the application development is not in compliance with LCDBG program requirements and could result in disallowed costs.

It is permissible for a local government (applicant) to use itsown staff to apply for and administer (if funded) the Louisiana Community Development Block Grant (LCDBG) Program. Procurement procedures do not apply if an applicant intends to use local funds to pay for such services.Anapplicant/grantee many NOT award funds to a sub-grantee for the performance of professional services.

For those who will use LCDBG funds to pay for these services, applicants will need to procure professional services (administrative consultingand/or engineering/architectural firms) to assist in completing the application(s) (pre-agreement costs) and administering the grant(s) if funded. Federal regulations (2CFR 200.317 through 200.326) describe the standards that must be met in securing professional services. In order to use LCDBG funds to pay for such services (including pre-agreement costs), the following requirements apply:

1. The application must be funded under the LCDBG Program;
2. The LCDBG procurement procedures must have been followed in the procurement of the engineering/architectural and/or administrative consulting firm;
3. All tasks and corresponding costs must be identified in a written contract between the selected firms and the local government (applicant) prior to the beginning of services being performed;
4. The application components prepared by engineering/architectural and/or administrative consulting providers must have been properly and adequately packaged as determined by the Office of community Development.

See Allowable LCDBG Professional Services Feeslocated on this website.

The procurement procedures carried out must be specific to the program year for which the application is being submitted. Procurement procedures undertaken in the current year will not be considered as meeting the requirements in future program years. Likewise, procurement procedures carried out in previous program years will not be considered as meeting the procurement requirements for the current program year.

No other services can be procured until after a grant has been awarded by the state.

Procurement Policy

A procurement policy must be written and adopted prior to securing contract services. If a procurement policy is already in place, the applicant/grantee must determine whether it includes all federal requirements contained in 2 CFR 200.317 through 200.326. If the policy does not contain all federal requirements (and the applicant/grantee intends to use LCDBG funds to pay for such services), the policy must be amended accordingly. A sample procurement policy is included following this section.

The procurement policy must address the following items.

1. A code of conduct that prohibits elected officials, staff, or agents from personally benefiting from LCDBG procurement must be included. The policy should prohibit the solicitation or acceptance of favors or gratuities from contractors or potential contractors. Sanctions or penalties for violations of the code of conduct by either grantee officials, staff or agents, or by contractors or their agents must be identified [2 CFR 200.318(c)(1)].
2. Proposed procurements should be reviewed by staff to avoid unnecessary and duplicative purchases and to insure costs are “reasonable” [2 CFR 200.318(d)].
3. Affirmative efforts must be undertaken to hire women’s business enterprises, minority firms and labor surplus firms, both by the grantee and the project’s prime contractor [2 CFR 200.321]. (Applicants should include a statement in the advertisement encouraging these businesses to participate including mailing copies of the solicitations to businesses that qualify.)
4. The method of contracting outlined in the policy should be acceptable (fixed price, cost plus fixed fee, purchase orders, etc.). Cost plus a percentage of cost contracts must be specifically prohibited if LCDBG funds are involved [2 CFR 200.323].
5. Procedures to handle and resolve disputes relating to procurement actions of the Grantee must be included [2 CFR 200.318(k)].
6. All procurement transactions regardless of dollar amount must be conducted so as to provide “maximum open and free competition” [2 CFR 200.319]. Some of the situations considered to be restrictive of competition include but are not limited to:
7. Placing unreasonable requirements on firms in order for them to qualify to do business,
8. Requiring unnecessary experience and excessive bonding,
9. Noncompetitive pricing practices between firms or between affiliated companies,
10. Noncompetitive awards to consultants that are on retainer contracts,
11. Organizational conflicts of interest,
12. Specifying only a “brand name” product instead of allowing an “equal” product to be offered and describing the performance of other relevant requirements of the procurement, and
13. Any arbitrary action in the procurement process.
14. Methods of procurement to be followed when purchasing materials and supplies or contracting for services must be included [2 CFR 200.320].

Conflicts of interest in the award and/or administration of contracts must be avoided. “No employee … of the applicant/grantee shall participate in selection, or in the award or administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when…the employee, any member of his (her) immediate family, his or her partner…has a financial or other interest in the firm selected for award.” (2 CFR 200.318(c)(1)) Other federal regulations with which the grantee must comply are the conflict of interest requirements in 24 CFR 570.611. The regulations are included in this document.

Methods of Procuring Professional Services

Four methods described herein are applicable if the applicant/grantee intends to use LCDBG funds. (This is not applicable if local funds are to pay for professional services. In this case, the applicant/grantee may use local laws and procedures.)

1.Micro-Purchase – Procurement by micro-purchase is the acquisition of services, the aggregate dollar amount of which does not exceed the micro-purchase threshold of $3,000. To the extent practicable, the non-Federal entity must distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable.

2.Small Purchase – This is a simple and informal method used to procure professional services that do not cost more than $150,000. Exception: engineering/architectural services. Engineering/architectural services must be procured through Competitive Negotiation using “Qualification Statements”.

1. Obtain price or rate quotations from at least three sources. They can be obtained by fax, telephone, or in writing. Three quotes must be obtained and not just requested. Also, a response of “not interested” does not qualify as a quote.
2. Maintain documentation of the businesses contacted; the way in which they were contacted; the prices that were quoted; and the reasons for the firm selected.
3. Execute a contract that identifies the scope of work and the terms of compensation.

3.Competitive Negotiation – Method applicable to procuring professional services exceeding $150,000. Also, this may be used in lieu of the Small Purchase procedure.

1. Advertise for Request for Proposals (RFP’s)and/or Qualification Statements.

The RFP is used when price is a factor in the selection process andthe qualification statement is used when price is considered after the firm has been selected.

1. Advertise in the applicant’s nearest metropolitan statistical area newspaper. The advertisement should state:
2. the city/parishis submitting an LCDBG application;
3. the type of professional service(s) that is being solicited;
4. the location and time where the scope of services, selection criteria, minimum requirements, etc., can be obtained; and
5. the deadline for the submittal of the proposal or qualification statements.
6. The advertisement cannot requirethat one firmprovide both administrative and engineering services. However, the same firm may be procured for both services.
7. To assure “proposals will be solicited from an adequate number of qualified sources” as required in the federal regulations at 2 CFR 200.320(d), a copy of the request for proposals as it will appear in the newspaper must be mailed to a minimum of 3 firms that provide administrative services.
8. The following information must be provided to all parties that responded to the advertisement (and/or mailing):

1. a cover letter from the applicantsigned by the chief elected official;
2. scope of services;
3. name and phone number of applicant’s contact person;
4. deadline and location for submittal of proposal and/or qualification statements;
5. selection criteria and corresponding point system that will be used to rate the proposals or qualification statements received; (Criteria must be identified as a tiebreaker when using an “all or none” point system. The State recommends that a tiebreaker is identified for all point systems although it is not required except for the instance previously identified.)and
6. a statement that the amount of funds available for the contract will be subject to LCDBG restrictions and approval.

f.An evaluation process of the RFP’s and/or qualification statements received is required to determine whether the selection criteria and requirements are met. Please note that receipt of just one RFPand/or qualification statement requires an evaluation. It is recommended that the applicant organize a committee of several people with knowledge of the LCDBG project, keeping in mind the Conflict of Interest rules.

Request for Proposals (RFPs)

RFPs are used to procure professional services such as administrative services, but not for the services of an engineering firm or architectural firm when using the competitive negotiation method.

An RFP must be prepared detailing the type of services needed and listing the selection criteria against which all responding proposals will be evaluated. Cost must be one of the selection criteria used and must be a minimum of 10 percent of the total possible points identified. Geographical preference may not be a criterion in accordance with federal regulations.

One of two procedures can be used to review proposals. The procedure chosen must be identified in the advertisement, and the procedure cannot be changed once the procurement process is initiated.

a)Establish a predetermined competitive range of points for proposals that would be considered to qualify for the job. All firms whose proposals scored within that range would be invited to an oral interview and asked to submit a “best and final offer”. The proposals would be re-evaluated and the highest scoring firm would be chosen.

b)Evaluate the proposal(s) according to the selection criteria and award the contract to the highest scoring firm.

Please note: A firm cannot include in their RFP the experience and background of other firms and will result in disallowed costs unless the following conditions are in place:

a)a written contractual agreement between the two firms that lists the services that will be provided by the subcontractor; and

b)the fees paid to the subcontractor must account for no less than 25 percent of the contract between the prime contractor and the applicant(excluding pre-agreement costs).

Qualification Statements

Qualification statements are used to procure the services of an engineering/architectural firm when using the competitive negotiation method. Qualification statements cannot be used to procure any other service. Engineering/architectural firms may be procured for administrative tasks, but the RFP procedure must be utilized to procure administrative services. A selection is made based on the competitors’ qualifications, subject to negotiation of fair and reasonable compensation.

The qualification statements must be evaluated by the selection criteria identified in the request. The applicant should negotiate costs with the top ranked firm.

4.Non-Competitive Negotiation – This method may be used when projects are declared an emergency by the local government. An applicant procuring services by this method must have prior written approval from the State.

Allowable Costs

Cost Analysis. The applicant must analyze the costs of contracts when intending to use LCDBG funds. The Cost/Price Detail Summary Form is included in this document and can be used for this purpose. Sole justification that the fees are within the amount allowed by the Office of Community Development is not adequate. Generally, administrative contracts are cost reimbursement contracts (cost plus fixed fee) where the firm is paid on the basis of costs incurred, overhead, other direct costs, and a fixed fee. Basic engineering and design contracts are generally fixed fee contracts where the firm is paid on the basis of work completed. The cost plus a percentage of cost and percentage of construction cost method of contracting cannot be used.

Pre-agreement Costs. A maximum of $3,700 in administrative pre-agreement costs is allowed for public facilities, demonstrated needs, and LaSTEP projects; and a maximum of $9,000 for economic development projects if the Environmental Review Record for the project is submitted to OCD prior to or at the same time of application submittal. If the Environmental Review Record is not submitted prior to or at the same time of application submittal, a maximum of $4,000 will be allowed. For economic development projects, basic engineering costs are also allowed as pre-agreement costs. (Refer to the current Consolidated Annual Action Plan for a breakdown of these maximum amounts, and the Allowable LCDBG Professional Services Fees document, both located on this website.) Pre-agreement costs must be identified separately in administrative contracts and engineering/architectural contracts.

Administrative Cost Limits. A maximum of $35,000 is allowed for public facilities and economic development projects.

A maximum of $25,000 and $30,000 is allowed for demonstrated needs and LaSTEP projects. If the grantee has more than one active LCDBG project (one that has not been issued a conditional or final close out) or if the demonstrated needs project is subsequently approved as an emergency project, the maximum amount allowed for administrative costs will be reduced to $20,000.

Local Government Costs. If awarded an LCDBG grant, an applicant may be reimbursed with grant funds to cover general expenses such as attendance to project-related workshops including travel and meals, fees for advertising, staff time on grant-related tasks, etc.

Engineering/Architectural Fees. Refer to the Engineering Fee Schedules and Policies under the Grants Management link for the amounts that can be requested. If, after a project has been funded, the scope of the project changes significantly, the Office of Community Development will make a determination of an amount that will be allowed. This determination will be made on a case-by-case basis.

If the applicant is not funded, the state will not be liable for any expenditure incurred.

If an applicant is awarded a grant, the State will advise the grantee of the amount of funds that will be allowed for administrative consulting and/or engineering/architectural fees. Therefore, the amount of the contract to be payable with LCDBG funds between the grantee and the administrative consulting firm and/or the engineering or architectural firm will be contingent upon the amount of funds awarded. If the grantee does not intend to supplement the LCDBG funds allowed for administrative and engineering/architectural fees, the selected firm must be made aware that the contracted amount for services to be rendered is subject to the availability and allowance of LCDBG funds and may be amended to reflect the reduced amount.

General Contract Requirements

A professional services contract must include the following provisions:

General Provisions:

1.Effective date of contract

2.Names and addresses of applicant/grantee and firm

3.Names of representatives of applicant/grantee and firm who will act as liaison for contract administration

4.Citation of the authority of the applicant/grantee under which the contract is entered into and source of funds

5.Conditions and terms under which the contract may be terminated by either party or remedies for violation/breach of contract

Scope of Services:

1.Detailed description of extent and character of the work to be performed

2.Time for contract performance and completion including project milestones, if any

3.Specification of materials or other services to be provided by both parties, such as maps, reports, printing, etc.

Method of Compensation

Provisions for compensation for services including fees and/or payment schedules and specification of maximum amount payable under contract. Never pay in advance of work.

Federal Contract Provisions for Professional Services Contracts

(A) Contracts for more than the simplified acquisition threshold currently set at $150,000, which is the inflation adjusted amount determined by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) as authorized by 41 U.S.C. 1908, must address administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as appropriate.

(B) All contracts in excess of $10,000 must address termination for cause and for convenience by the non-Federal entity including the manner by which it will be effected and the basis for settlement.

(C) Rights to Inventions Made Under a Contract or Agreement. If the Federal award meets the definition of “funding agreement” under 37 CFR §401.2 (a) and the recipient or subrecipient wishes to enter into a contract with a small business firm or nonprofit organization regarding the substitution of parties, assignment or performance of experimental, developmental, or research work under that “funding agreement,” the recipient or subrecipient must comply with the requirements of 37 CFR Part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements,” and any implementing regulations issued by the awarding agency.

(D) Clean Air Act (42 U.S.C. 7401-7671q.) and the Federal Water Pollution Control Act (33 U.S.C. 1251-1387), as amended—Contracts and subgrants of amounts in excess of $150,000 must contain a provision that requires the non-Federal award to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401-7671q) and the Federal Water Pollution Control Act as amended (33 U.S.C. 1251-1387). Violations must be reported to the Federal awarding agency and the Regional Office of the Environmental Protection Agency (EPA).